27.10.2016
Fresenius Medical Care AG & Co. KGaA DE0005785802
DGAP-News: Fresenius Medical Care AG & Co. KGaA reports strong third quarter and confirms full year guidance
DGAP-News: Fresenius Medical Care AG & Co. KGaA / Key word(s): Quarter
Results
Fresenius Medical Care AG & Co. KGaA reports strong third quarter and
confirms full year guidance
27.10.2016 / 07:04
The issuer is solely responsible for the content of this announcement.
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Fresenius Medical Care reports strong third quarter and confirms
full year guidance
- Group revenue +9% (+9% at constant currency), driven by a strong
performance in Health Care services
- EBIT growth in line with revenue growth, supported by very good
development in Latin America and Asia-Pacific
- Significant net income growth of 27% (+17% excluding special items)
- Care Coordination with positive growth momentum (revenue +29%) and
improved sequential margin of 5% (+60 basis points) in line with
expectations
- Full year 2016 guidance confirmed
Key figures - third quarter and first nine months 2016:
$ million Q3 2016 Q3 2015 Growth yoy 9m 2016 9m 2015 Growth yoy
Net revenue 4,598 4,231 +9% 13,224 12,390 +7%
Operating income (EBIT) 670 614 +9% 1,851 1,665 +11%
Net income 333 262 +27% 855 713 +20%
Net income (excl. special items) 333 284 +17% 855 735 +16%
Basic earnings per share (in $) 1.09 0.86 +26% 2.80 2.34 +19%
"We are very pleased with our performance in the third quarter of 2016,
which is the result of a strong execution in all regions, the success of
our Global Efficiency Program as well as further expansion of our global
footprint," said Rice Powell, Chief Executive Officer of Fresenius Medical
Care. "Care Coordination services maintain excellent growth momentum which
will help us to extend our range of health care services even further.
Based on our strong result for the third quarter, we hereby confirm our
guidance for the full-year 2016."
Revenue & earnings
Net revenue for the third quarter improved by 9% and reached $4,598 million
(+9% at constant currency), mainly driven by a strong performance in Health
Care services. Contributing revenues of $3,734 (+10%), Health Care services
was largely supported by an improvement in US revenue per treatment (+$3)
as well as a strong organic growth. Dialysis products revenue increased by
4% to $864 million in the third quarter, mainly driven by higher sales of
machines, dialyzers and products for acute care.
Net revenue in the first nine months of 2016 increased by 7% (Health Care
services revenue +8%/+9% at constant currency; dialysis products revenue
+2%/+4% at constant currency).
In the third quarter, operating income (EBIT) increased by 9% to $670
million, in line with revenue growth. The operating income margin increased
by 10 basis points to 14.6%, underlining a stable earnings quality. The
increase in EBIT margin was mainly driven by the positive development in
Latin America after the divestiture of our dialysis service business in
Venezuela in the previous year's third quarter as well as a strong
performance in Asia-Pacific. The EBIT margin in North America was impacted
by higher personnel expenses for dialysis services, partially offset by
lower costs for health care supplies and a higher volume with commercial
payers.
For the first nine months of 2016, operating income (EBIT) increased by 11%
to $1,851 million.
Net interest expense in the third quarter remained at the previous year's
level ($100 million). For the first nine months of 2016, net interest
expense increased by 1% to $308 million, mainly due to lower interest
income as a result of the repayment of interest bearing notes receivables
in the fourth quarter of 2015, partially offset by a lower debt level.
Income tax expense decreased by 2% to $164 million in the third quarter.
This translates into an effective tax rate of 28.8%, a decrease of 400
basis points compared to the third quarter of 2015 (32.8%). This decrease
was mainly driven by a lower tax expense as a result of released tax
liabilities in the third quarter of 2016 due to tax audit settlements with
tax authorities, as well as a favorable impact from the prior-year non-tax
deductible loss from the divestiture of our dialysis service business in
Venezuela.
For the first nine months of 2016, income tax expense increased to $471
million, translating into an effective tax rate of 30.5% (-190 basis
points).
Net income attributable to shareholders of Fresenius Medical Care AG & Co.
KGaA increased by 27% to $333 million in the third quarter. Excluding the
2015 impacts of (i) the after tax loss, $26.9 million, from the divestment
of our dialysis service business in Venezuela and (ii) the realized portion
of the after tax gain, $4.8 million, from the sale of our European
marketing rights for certain renal pharmaceuticals to our joint venture,
Vifor Fresenius Medical Care Renal Pharma, net income increased from $284
million to $333 million (+17%) in the third quarter. Based on approximately
306.0 million shares (weighted average number of shares outstanding), basic
earnings per share (EPS) increased from $0.86 to $1.09 (+26%); EPS
excluding special items increased from $0.93 to $1.09 (+17%).
For the first nine months of 2016, net income attributable to shareholders
of Fresenius Medical Care AG & Co. KGaA increased by 20% to $855 million.
Segment development
In the third quarter, North America revenue increased by 10% to $3,300
million (72% of total revenue). Health Care services revenue grew by 10% to
$3,068 million, of which Care Coordination contributed $618 million (+29%),
supported by significant organic revenue growth of 24%. Dialysis care
revenue contributed $2,450 million (+6%), driven by increased revenue per
treatment and higher volumes of dialysis treatments with commercial payers.
Dialysis products revenue grew by 7% to $232 million, due to increased
product sales (especially machines and dialyzers). Operating income in
North America came in at $536 million (+4%). The operating income margin of
16.2% was in line with the second quarter of 2016, but weaker than the
previous year's third quarter (-90 basis points). This decline was mainly
attributable to higher personnel expenses, a cost impact related to the
vesting of long term incentive plan grants and growth in lower-margin Care
Coordination, partially offset by lower cost for health care supplies. The
operating income margin in Care Coordination came in at 5.0%, an increase
of 60 basis points over the second quarter 2016, but below the previous
year's third quarter margin of 6.8%.
For the first nine months of 2016, North America revenue increased by 9% to
$9,512 million. Operating income increased by 16% to $1,486 million.
EMEA revenue increased by 2% to $675 million in the third quarter of 2016
(+4% at constant currency). Health Care services revenue for the EMEA
segment increased by 8% (+10% at constant currency) to $335 million. This
was mainly the result of contributions from acquisitions (8%), partially
offset by the negative effect of exchange rate fluctuations (2%). Dialysis
treatments increased by 9% in the third quarter. Dialysis products revenue
decreased by 3% (-1% at constant currency) to $340 million. The decrease
was driven by lower sales of renal drugs (whose marketing rights were sold
in 2015) and dialyzers, partially offset by higher sales of machines and
bloodlines. Operating income in the EMEA segment decreased by 4% to $125
million in the third quarter due to the prior-year impact from the gain
resulting from the sale of European marketing rights for certain renal
pharmaceuticals, an unfavorable impact from manufacturing costs as well as
higher bad debt expense. This was partially offset by favorable foreign
exchange effects. The operating income margin decreased to 18.5% (-120
basis points).
For the first nine months of 2016, EMEA revenue increased by 1% to $1,982
million (+4% at constant currency) and operating income decreased by 3% to
$395 million.
Asia-Pacific revenue grew by 13% (+8% at constant currency) to $427 million
in the third quarter. The region recorded $192 million in Health Care
services revenue, based on an increase of 5% in dialysis treatments. With
an 11% growth in revenue to $235 million (+12% at constant currency), the
product business showed an excellent sales performance across the entire
dialysis products range. Operating income showed a significant increase
(+25%) to $85 million. The operating income margin increased substantially
to 19.8% (+190 basis points). This was primarily driven by the positive
impact from overall business growth and favorable foreign exchange effects.
For the first nine months of 2016, Asia-Pacific revenue grew by 8% to
$1,198 million (+8% at constant currency) and operating income increased by
3% to $225 million.
Latin America delivered revenue of $192 million, an increase of 9% and an
impressive improvement of 27% at constant currency. Health Care services
revenue increased by 6% to $139 million (+31% at constant currency) as a
result of higher organic revenue per treatment primarily driven by a
retrospective reimbursement rate increase, contributions from acquisitions
and growth in same market treatments, partially offset by the effect of the
divested dialysis care business in Venezuela. Dialysis treatments increased
by 1% in the third quarter. Dialysis products revenue increased by 19% to
$53 million (+18% at constant currency), as a result of higher sales of
dialyzers, concentrates and bloodlines. Operating income came in at $20
million supported by the impact from higher revenue in the region,
partially offset by unfavorable foreign currency effects and higher costs
mainly related to inflation. The operating margin increased to 10.5%.
For the first nine months of 2016, Latin America revenue decreased by 10%
to $520 million (+13% at constant currency) and operating income increased
by 86% to $47 million.
Cash flow
In the third quarter of 2016, the company generated $439 million in net
cash provided by operating activities, representing 9.5% of revenue ($579
million in the third quarter of 2015). The decrease was primarily
attributable to a discretionary cash contribution of $100 million to
Fresenius Medical Care's pension plan assets in the United States. The
number of DSO (days sales outstanding) came in at 72 days, an increase of 2
days compared to the second quarter of 2016.
In the first nine months of 2016, the company generated net cash provided
by operating activities of $1,296 million, representing 9.8% of revenue.
Employees
As of September 30, 2016, Fresenius Medical Care had 108,851 employees
(full-time equivalents) worldwide, compared to 102,591 employees at the end
of September 2015. This increase of 6% was primarily attributable to our
continued organic growth.
Recent events: Acquisition of Sandor Nephro Services in India
In September 2016, Fresenius Medical Care acquired 85% of equity interest
in the Indian dialysis group Sandor Nephro Services from a group of
investors. Established in 2011, Sandor Nephro Services is India's second
largest dialysis care provider. Under the brand name "Sparsh Nephrocare"
the company operates a network of more than 50 dialysis centers across the
country. With the acquisition, Fresenius Medical Care has clearly
strengthened its core business in one of the fastest growing economies of
the world. Sandor Nephro Services is expected to generate revenue of around
$3 million in full year 2016. Fresenius Medical Care expects the investment
to be accretive in 2017 on earnings after tax.
Outlook 2016 confirmed
Based on the positive business development in the first nine months 2016,
Fresenius Medical Care confirms its full year outlook 2016. The company
expects a currency-adjusted revenue growth between +7% and +10% for 2016.
Net income attributable to shareholders of Fresenius Medical Care AG & Co.
KGaA is expected to increase by +15% to +20% over the previous year.
Conference call
Fresenius Medical Care will hold a conference call to discuss the results
of the third quarter & first nine months 2016 on Thursday, October 27, 2016
at 3.30 p.m. CEDT/ 9.30 a.m. EDT. The company invites investors to follow
the live webcast of the call at the company's website
www.freseniusmedicalcare.com in the "Investors/Events" section. A replay
will be available shortly after the call.
Please refer to our statement of earnings included at the end of this news
and to the attachments as separate excel- and PDF-files for a complete
overview of the results for the third quarter/first nine months 2016.
Fresenius Medical Care is the world's largest provider of products and
services for individuals with renal diseases, of which around 2.8 million
patients worldwide regularly undergo dialysis treatment. Through its
network of 3,579 dialysis clinics, Fresenius Medical Care provides dialysis
treatments for 306,366 patients around the globe. Fresenius Medical Care is
also the leading provider of dialysis products such as dialysis machines or
dialyzers. Along with the core business, the company focuses on expanding
the range of additional medical services in the field of care coordination.
For more information about Fresenius Medical Care, visit the Company's
website at www.freseniusmedicalcare.com.
Disclaimer
This release contains forward-looking statements that are subject to
various risks and uncertainties. Actual results could differ materially
from those described in these forward-looking statements due to certain
factors, including changes in business, economic and competitive
conditions, regulatory reforms, foreign exchange rate fluctuations,
uncertainties in litigation or investigative proceedings, and the
availability of financing. These and other risks and uncertainties are
detailed in Fresenius Medical Care AG & Co. KGaA's reports filed with the
U.S. Securities and Exchange Commission. Fresenius Medical Care AG & Co.
KGaA does not undertake any responsibility to update the forward-looking
statements in this release.
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27.10.2016 Dissemination of a Corporate News, transmitted by DGAP - a
service of EQS Group AG.
The issuer is solely responsible for the content of this announcement.
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Language: English
Company: Fresenius Medical Care AG & Co. KGaA
Else-Kröner-Straße 1
61352 Bad Homburg
Germany
Phone: +49 (0) 6172- 609 2525
Fax: +49 (0) 6172- 609 2301
E-mail: [email protected]
Internet: www.freseniusmedicalcare.com
ISIN: DE0005785802, ,
WKN: 578580, 578583
Indices: DAX
Listed: Regulated Market in Frankfurt (Prime Standard); Regulated
Unofficial Market in Berlin, Dusseldorf, Hamburg, Hanover,
Munich, Stuttgart, Tradegate Exchange; NYSE
End of News DGAP News Service
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